Trailing Dividend Yield at Recommendation Date
Buy-Up To Price
|Navigator Global Investments||21-Aug-20||12.0%||AUD||1.62||1.93||2.28||41%|
|Eastern Company (Egypt)||15-Nov-20||10.5%||EGP||11.97||None Set||14.1||18%|
|British American Tobacco (Kenya)||15-Nov-20||8.3%||KSH||359.75||None Set||390||8%|
If you have been following my Journals since I started six months ago, and have bought into some or all of my free stock recommendations, you’d be up as much as 41%, excluding any dividends received.
Even though these numbers are impressive, I must caution you. What I’m aiming for is an income fund and what counts is that we receive a healthy and steady (10%+) income through investing in high-quality assets. We are in it for the long term. That said, consistent with the Fund’s mandate, with the cheap valuations that drive our investment decisions I also expect that long-term, over a 10-year period, stock prices for the portfolio also have the potential to increase as much as between two to four times. The 6-month performance of the recommendations above certainly shows that material capital appreciation coupled with a strong dividend income stream is possible.
One significant risk to the portfolio is foreign currency risk. Our fund’s reporting will be denominated in USD and our investments will be made in the currencies of the local exchanges. We will not hedge our portfolio for currency risk. We will, however, invest in countries which we conclude, have a low risk of material currency devaluations.
There is no point investing in a company that sees its share price appreciate, only to see currency depreciation (relative to the USD) cancel out any gains made. An example of our currency evaluation can be read in Journal 25 – Currency Risk and Investing In Tobacco Companies as Dividend-Paying Investments.
FX Rate at
FX Capital Gain (Loss)
|Navigator Global Investments||21-Aug-20||AUD||1.397||1.299||7%|
|Eastern Company (Egypt)||15-Nov-20||EGP||15.59||15.69||-1%|
|British American Tobacco (Kenya)||15-Nov-20||KSH||109.3||110.1||-1%|
As you can see from the table above, there has been no significant diminution in the valuation of our recommendations due to foreign exchange movements. In fact, the 7% and 8% appreciation of the Australian dollar relative to the USD for Jupiter and Navigator adds a tailwind to the portfolio.
Just a quick update on how our fund is shaping up. I am happy to announce that the company, Double Digit Dividends Fund Ltd has been incorporated in the British Virgin Islands. Its share certificate is provided below.
I am busy setting up its bank account and its security brokerage accounts to enable the Fund to buy and sell shares globally.
Northern Trust Bank, in the USA shall be appointed as the Fund’s bank. The Fund’s Administrator, Circle Partners, has worked extensively with them in the past.
EFG Hermes, the leading investment bank and brokerage firm in Egypt and the Middle East, shall be appointed as the Fund’s primary security broker. The Firm has offices in 13 countries and covers 75 emerging and frontier markets in Asia, Africa, Europe and the Americas with a staff of 2,900 employees.
I have had several recent enquiries regarding the Fund. I shall keep updating you on our progress by way of a journal, so stay tuned.
In the meantime, if you like to express an interest to receive the Fund’s term sheet and Private Placement Memorandum, can you kindly sign-up to the Level 2 membership below. These documents will be ready within a fortnight and the members-only link to download them shall be sent to you.
Until my next journal,
PS. To sign up to Level 2, simply login using the form below and you will be taken to the Account page where you can Upgrade your membership. If you do not have an account yet, register here.